Textbook Example Of ‘Buy On Rumour, Sell On News’
Today, many novices in Dalal Street were baffled as to why the Sensex and Nifty crashed in such a savage manner even after it was confirmed that the Exit Polls were right and NAMO would be re-elected with an absolute majority.
In the morning session, the Sensex and Nifty surged like rockets to reach record heights of 40,000 and 12,000 respectively but soon thereafter turned tail and plummeted to the ground.
#NIFTY HITS 12,000 & #SENSEX HITS 40,000 FOR THE FIRST TIME #VerdictWithCNBCTV18 pic.twitter.com/rAYdhLSQoQ
— CNBC-TV18 (@CNBCTV18Live) May 23, 2019
#VerdictWithCNBCTV18 | BJP-led NDA gets majority, but mkt fails to hold record highs. #Sensex slips 1,314 points, #Nifty 384 points from record highs. Sensex & Nifty post biggest intra-day fall in 11 years #Verdict2019 pic.twitter.com/YCZxnme2sL
— CNBC-TV18 (@CNBCTV18Live) May 23, 2019
Why did sensex and nifty turn negative today ?#Sensex #Nifty #Elections2019results
— anuj anand (@anujdalian) May 23, 2019
Sensex fell 1,400 points after morning rally, Bank Nifty fell 1,300 points. Kyon bhai? #ModiAaGaya fir market kyon gira? Kyonki investor bhaag rahe hain, especially foreign investors ?
— NewsNinja (@NewsNinja) May 23, 2019
However, I was not baffled at all.
This is because several astute traders had already sounded the warning that the confirmation of the news about NAMO’s victory would lead to a bout of profit booking, which would send the Indices spiraling downwards.
MAINE BOLA THA 😛 https://t.co/JhiyF0M1Y9
— Ankit Chaudhary (@entrepreneur987) May 23, 2019
Reasoning for the bearish view :
The exit polls have probably lead to discounting of upto 350 seats for the NDA, unless it's anything above that, the good news is already discounted— Subhadip Nandy (@SubhadipNandy) May 22, 2019
What I said in the morning.
??? https://t.co/whG4iwLRVQ— P R Sundar (@PRSundar64) May 23, 2019
Upmove done for the day. Have no trading longs. Aggressive traders short and buy puts with stoploss and right quantity and risk management.
Bank nifty futures below 31500 and nifty futures below 12000— CA.Rudramurthy BV (@iamrudramurthy) May 23, 2019
The same theory was formulated by Anuj Singhal of CNBCTV18.
He rightly theorized that the good news is already baked in the price and that Nifty would be unable to hold on to the coveted level of 12,000.
.@_anujsinghal explains how one should navigate the markets on the day of the verdict of the general elections tomorrow. #LokSabhaElections2019 pic.twitter.com/np7XbJX6YF
— CNBC-TV18 News (@CNBCTV18News) May 22, 2019
It may be recalled that even Samir Arora had warned several weeks ago that much of the money is “momentum money” of FIIs, which would be withdrawn as soon as the event is over (see Even If NAMO Wins, Markets Will Correct).
It is notable that even the India VIX (Volatility Index) crashed like a ton of bricks during the announcement of the results, implying that it was the excitement about the results which was holding the market in place.
Traders make Rs. 1.8 crore plus
While investors sported glum faces, traders were beaming with joy.
P R Sundar, an authority on futures and options, came at the top with a massive gain of Rs. 1.80 crore.
He revealed that this is his “highest one day profit“.
He humbly dedicated it to NAMO.
The monk who sold everyone's Ferrari to gift me a Benz.
Dedicated to Mr Modi, more than Rs 1.8 Crore profit, highest one day profit. pic.twitter.com/lmT41a0aE0— P R Sundar (@PRSundar64) May 23, 2019
Mitesh Patel, the trader who claims to have mastered Nita Ambani‘s secret mantra, had to stay content with a relatively meager gain of Rs. 3 lakh.
He claimed that he could have effortlessly raked in Rs. 30 lakh from short-selling futures and options but was unfortunately denied leverage by the broker.
Didn't got leverage. Otherwise could be more than 30L profit.
Made only 3.3L after brokerage. pic.twitter.com/c0VVAHtMce— Mitesh Patel (@Mitesh_Engr) May 23, 2019
Other traders also posted screenshots of impressive gains from their exploits of the day.
131 + 60 = 191 k , Banknifty Intraday Weekly Expiry pic.twitter.com/7H0QEMLax0
— AA (@anilbalaji11) May 23, 2019
Made 3.45 lacs. Very volatile day.
Cover loss made in last 3 day.
I sold most of option at each strike price. Didn't think twice while booking loss when going wrong. I was placing order like every minute. Now, need some rest.Total 176 punch.https://t.co/yICvKbX57q pic.twitter.com/5MqBgkDqxa
— Ronak Unadkat (@Ronak_Unadkat) May 23, 2019
Zerodha lives up to expectations, serves record of 15 million orders
There was a lot of trepidation amongst traders as to whether Zerodha would be able to cope with the massive volumes that would be generated on the eventful day.
It may be recalled that during the high volatility period of the India-Pak hostility, Zerodha had conked off and created a lot of frustration for traders (see Zerodha Held Liable To Compensate Traders For Loss Due To “Network Failure”).
However, today, Zerodha’s performance was flawless.
It released statistics which show that a mind-boggling 1 million unique users had placed 15+ million (1.5 crore) orders.
Even assuming the ARPO (average revenue per order) is a paltry Rs. 20, Zerodha would have raked in a profit in excess of Rs. 30 crore.
No doubt, we have to compliment Nithin Kamath (CEO), Kailash Nadh (CTO) and Karthik Rangappa (HOE) for the stupendous task (read their AMA on Reddit).
Well… pic.twitter.com/SOpbXaljQm
— Zerodha (@zerodhaonline) May 23, 2019
It was not down on such an important day so kudos. You are gaining our confidence back.
— Ravikiran (@ravi_stockm) May 23, 2019
?? In my two years with zerodha never faced any issue. Keep it up??
— Siddharth (@anvekarsidd) May 23, 2019
Well done ! Loved that you shared success news with all of us too.
— Udit Mathur (@udcreation92) May 23, 2019
Extremely glad to see Zerodha did not go down today. Keep it up guys. Happy to have traded the whole day worry-free. 🙂
— Adam Banerjee (@AdamBanerjee) May 23, 2019
NAMO’s victory will transform India into a ‘global superpower‘ with a $5 Trillion economy
Billionaires Uday Kotak and Rashesh Shah rushed to congratulate NAMO.
They opined that India will now be transformed into a ‘global superpower‘ and that its economy will swell from $3 Trillion to $5 Trillion.
Time for transformation of India. Time for deep reform. I dream of us as a global superpower in my lifetime. Heartiest congratulations to @narendramodi , the BJP, and the NDA.
— Uday Kotak (@udaykotak) May 23, 2019
The election verdict is out. Congrats to PM Modijee and the entire BJP team and to the NDA alliance. This will be start is an exciting phase for India as we build on the refoms of the last innings. We look forward to India moving from usd 3 trn to 5trn
— Rashesh Shah (@rasheshshah) May 23, 2019
Porinju Veliyath and Sunil Singhania pointed out that the impact of NAMO’s victory is that mid-cap and small-stocks will now come back into demand and resume their multibagger journey.
I expect a larger return for mid & small caps, says @SunilBSinghania#Battle2019 #ElectionResults2019 #Verdict2019 pic.twitter.com/7yZBaukJeS
— ET NOW (@ETNOWlive) May 23, 2019
I do not think there will be a big runaway in Nifty or Sensex: @porinju #Elections2019 #Sensex #Nifty #Midcaps #ETMarkets pic.twitter.com/ZCYbzAm0pg
— ETMarkets (@ETMarkets) May 23, 2019
Morgan Stanley sets Sensex target at 45,000 by June'20 #ETMarkets #MarketsNews #BizNews #MarketsUpdate https://t.co/OW3DTlTaAz
— ETMarkets (@ETMarkets) May 23, 2019
Which are the best stocks to buy now?
I have already drawn attention to ten high-quality stocks which have been cherry-picked by leading experts as being big beneficiaries of NAMO’s victory (see Top 10 Stocks To Buy Now To Prosper From NAMO’s v.2 Regime).
Each one of the chosen stocks is fail-safe and destined to give handsome gains to investors!
Porinju Veliyath & Sunil Singhania Stock Reco: Holding Co with tiny Equity Share Capital of Rs 13.95 Cr & holding huge treasure with Market Capitalization of Rs. 69,000 Crs. – AN INCREDIBLE DISCOUNT OF OVER 77%. AN UNBELIEVABLE DEAL. Potential to double https://t.co/ahgg1TxQ9N pic.twitter.com/ludiTFIUiB
— RJ Stocks (@RakJhun) May 21, 2019
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